BQ Big Decisions: Here Are The Alternatives To Debt Mutual Funds
BloombergQuint’s Big Decisions podcast gets you the insights you need to make big money decisions with confidence.
Bank fixed deposits, a familiar savings instrument among old-time investors, may be back in focus amid concerns over debt mutual funds.
Investors have turned nervous about schemes that buy debt securities ever since IL&FS Group defaulted, forcing asset managers to mark down valuations. Their fears were further fuelled by high-profile defaults by large corporate borrowers in the following months. Franklin Templeton’s decision to wind down six of its fixed income mutual fund schemes in March citing redemption pressure only amplified the worries.
Yet, fixed income mutual fund investments have given above-normal returns over the past few months. Falling interest rates generally lead to capital gains in most bond portfolios. Among fixed income schemes, there are those that invest in the high quality—and the safest—form of debt.
Still, there are investors who are looking for alternative fixed-income investments.
On this BQ Big Decisions podcast, BloombergQuint spoke to Kirtan Shah, chief financial planner at Sykes & Ray Equities, on the issue. He said fixed income investments are much more than just a binary choice between fixed deposits in a bank and mutual fund investments. There’s a host of investment choices—all having their own pros and cons. It’s just a question of choosing the right one, he said.